FERC blocks N.Y. grid operator’s bid to support clean energy

Source: By Jeremy Dillon, E&E News reporter • Posted: Tuesday, September 8, 2020

The Federal Energy Regulatory Commission moved late Friday to block proposed market changes by New York’s grid operator aimed at better aligning with the state’s clean energy goals.

Republicans on the commission rejected the New York Independent System Operator’s proposal in a 3-1 vote — prompting sharp criticism from the agency’s lone Democratic commissioner, Richard Glick, as well as calls from environmentalists for New York to pull out of FERC-backed capacity markets.

“The Commission’s approach is both deeply misguided and will ultimately doom NYISO’s current capacity market construct by forcing New York to choose between the Commission’s constant meddling and the state’s commitment to addressing the existential threat posed by climate change,” Glick said in his dissent.

The Republican commissioners argued that the changes to NYISO’s tariff would unfairly promote clean energy resources and prevent other generation, like that from coal or natural gas, from competing in its market.

NYISO had sought changes relating to “buyer-side mitigation rules” that affect how subsidized resources like battery storage and renewable energy can compete in its capacity market, which is aimed at ensuring there is enough power generation to meet demand into the future (Energywire, Feb. 20). The grid operator said the revisions were needed to prioritize clean energy sources, reflecting requirements set by the state’s climate goals.

Under state law, New York must receive 70% of its power from renewable energy by 2030 and 100% from renewables by 2040. Those ambitions have already prompted the state to promote transmission build-out and explore setting a price on carbon emissions, among other actions.

FERC’s Republican commissioners argued in the order that NYISO’s proposal could lead to higher prices for New York ratepayers, invoking the agency’s responsibility under the Federal Power Act to ensure “just and reasonable” rates.

Former Commissioner Bernard McNamee, who left FERC on Friday, joined Chairman Neil Chatterjee and Commissioner James Danly in blocking the proposal.

The Natural Resources Defense Council blasted the agency’s order.

“This decision is a stunning example of overreach from Washington, further proof that FERC-regulated wholesale capacity markets are fundamentally flawed,” said Christopher Casey, a senior attorney at NRDC.

“The FERC majority is once again demonstrating hostility to the legally established authority of states to determine how best to provide power to their citizens.”

The latest move by FERC is not the first time the commission has entered the fray over capacity markets and clean energy. Late last year, FERC issued an order that upended how state-backed energy resources could compete in capacity markets run by PJM Interconnection LLC, the nation’s largest grid operator.

The action, opponents said, would hurt states’ ability to direct their electricity mix toward more renewable or nuclear energy. The commission argued that the changes were needed to ensure that competitive markets were not suppressed by any individual state’s actions.

The disconnect has prompted some states, like New Jersey, Illinois and Maryland, to look at leaving the PJM capacity market to form their own state-backed markets. Friday’s decision could prompt New York to follow suit, Glick warned.

“The evident hostility toward state policies displayed in this order will only add fuel to that fire,” he said.